A significant portion of investors and investment advisors expect the BSE Sensex to rise up to 20,000 over the next six months, according to a survey by JP Morgan Asset Management and research firm ValueNotes.
“Indian investors and advisors appear unaffected by the recent volatility in stock markets. 48% of retail investors and 76% of advisors expect the benchmark Index to trade between 17,000 and 20,000 in June 2012,” the survey found.
Although the overall investment sentiment currently appears subdued, the optimism about global and Indian economic growth is improving marginally. Most interestingly, corporate, advisors and HNIs are now more optimistic than they were in July 2011, even as the mass of retail investors have become more pessimistic.
The ebbing Investment Confidence Index (125) showed no signs of revival in the current quarter and remained almost flat between July 2011 and December 2011. After witnessing a series of highs and lows over five quarters, the ICI has declined continuously over the past year.
The survey conducted in November-December 2011 was based on Interviews with investors and advisors in Delhi/NCR, Kolkata, Ahmedabad, Mumbai, Pune, Hyderabad, Bengaluru and Chennai.
Further, retail investment activity in mutual funds has picked up 9 percentage points from last quarter to reach 70%, while in stocks it fell 6 percentage points. With falling markets, Risk-averse investors show lesser preference for stocks (from 70% to 56%) but increased preference for mutual funds (from 44% to 68%) since March 2011.
The survey findings indicate that retail investor confidence has faded in the last few months. Investor confidence (132) faltered 28 points since September 2010 (160) reaching its all time low. India Inc. (115) and the advisor community (127) are marginally more optimistic compared to their July 2011 lows. Among the three advisor categories, bank confidence (133) recovered by 18 points from July 2011, while IFA confidence (119) plummeted 17 points to touch its lowest.